The beef cattle market over the next 10 years

[Sir Loin]

The beef cattle market over the next 10 years

Over the next 10 years:

Where do you see beef cattle inventories going in the US, up, down or remain the same, and why ?
Where do you see demand for beef going, up, down or remain the same ?
Where do you see beef cattle prices going?
Where do you see beef prices going?

SL

 

[greybeard]

Over the next 10 years:

Where do you see beef cattle inventories going in the US, up, down or remain the same, and why ?
Up tho only slightly. Because the rest of the world is moving toward eating more beef instead of poultry/pork and US producers will attempt to meet their demand--but the rest of the world will also be trying to meet that export demand and China is already making every effort now to develop a self sustaining cattle industry of their own
Where do you see demand for beef going, up, down or remain the same ?
US beef demand I see as remaining about the same as now with a slight increase
Where do you see beef cattle prices going?
up for about the next 4 years--beyond that timeframe, too many variables to guess
Where do you see beef prices going?
Assuming you mean retail consumer prices--UP

SL[/quote]

 

[Isomade]

The beef cattle market over the next 10 years

Over the next 10 years:

Where do you see beef cattle inventories going in the US, up, down or remain the same, and why ?Overall inventory on a per capita basis will continue to decline, though beef cattle overall numbers will slightly increase barring major drought or government involvement.
Where do you see demand for beef going, up, down or remain the same ?
Up, but refer to answer above. Only because of per capita, and barring....
Where do you see beef cattle prices going?
Up......or maybe down......or remain stable. This is the most accurate answer you will receive.
Where do you see beef prices going? Up.....or.....

SL

 

[Sir Loin]

Thanks guys, that is pretty much the same as I saw it, up until about November when I starting asking myself " why am I seeing white cows in pastures that have been all black for the past 20 years".
In my area it was rare to see anything other then black Angus.

Then I ran across a post over on the "think tank" titled " The bloom is off the rose".
In short the concusses of opinion was/is that demand has shifted from quality to quantity and CAB is on its way out.
It was/is further agreed:
US inventory of beef cattle will continue to decline as will the demand for prime beef, while demand for choice beef cattle will remain constant or go up.

Beef cattle prices, for prime beef cattle will go down, while choice cattle prices will remain the same or go up.
Consumer prices for beef will go up slightly but be packaged in smaller quantities and/or new cuts will keep consumer prices constant per meal.

Dairy industry beef prices will go down.

With that in mind I now know why staunch black Angus breeders are now crossing their Angus with Chars.
Simply put: They are now willing to give up quality for quantity to increase profit by producing a larger animal of lesser quality.
Makes perfect sense to me. How about you?
SL

 

[ALACOWMAN]

you let a few folks gnaw on a steak, like a rat on rawhide...that they paid their ""hard earned"" top dollar for... you'll see the trend shift back to quality..

 

[SRBeef]

I read an article recently that mentioned a slight drop in the ratio of heifers to steers in the US slaughter mix. The implication is that folks are finally starting to retain heifers. US beef herd is currently at 1942 levels. This may mean the decline in herd numbers is maybe coming out of a dive to level flight but not likely to increase significantly for 4-5 years if then.

As good beef calves get scarce compared to demand, black hide color will suddenly maybe be not so important. Producers will be looking more at traits than just color. I think you can start to see it at the upper midwest salebarns now - quality calves bringing top price even if they are not full black.

Dairy steers will fill the hamburger market but there will be more emphasis on quality beef-breed beef. Folks are more concerned every day about what they are eating and feeding their kids. At least the more profitable portion of the market is concerned.

Corn will come down a bit to around $4 if and when the US midwest gets a good weather year. Latest word I heard at a seminar recently is that we are likely in for a multi-year almost 1930's style drought across the midwest - last year was not just a one year anomaly. World wide weather patterns are changing.

If this is true, we will be looking at different, more efficient ways to produce quality beef. jmho.

Jim

 

[greybeard]

(this could get long)
You said 10 years, so that's where I went, but I was speaking more of IN ten years, not the interim time period. I tend to look at global markets in all things, since that has affected all the US sectors so adversely.
But you may well be right regarding quantity versus quality. The general US consumer doesn't recognize the difference between prime and choice--they just look at the price/lb on the package in the meat case. But, the underlying cause of the long term switch to increased production of beef is foreign demand of both beef and grain exports. It will happen just like we saw with soybeans. The big soybean demand took off due to China's demand for it and we now have (globally) more acreage in beans than corn--and in many producing nations, more in beans than all feed grains combined. Combine that lost grain acreage with the ethanol production requirement, and we get the increase in cost/lb to raise an animal to slaughter weight.

China, since Tianemen Sq, has embarked on a steadfast policy of becoming a or THE global leader in every economic sector, including long range plans to be self sufficient in meat production, but they lack the grain production to pull it off. They will buy more and more US, Brazilian and EU grain to be able to feed their increased pork, poultry, and beef production. As the Chinese population becomes more prosperous, there is an ever increasing appetite for quality beef instead of the more traditional pork or poultry--just as they have become enamored with quality US automobiles and everything else. They are the world's largest user of energy products and have the ability to set the benchmark prices based on their needs and will be doing the same with cereal grains both for human consumption and livestock feeds.

China does not presently buy US beef because of the BSE thing, but that hasn't stopped them from buying up embryos and semen from top breeders and buying live breedstock from Australia and New Zealand. There is even speculation that a lot of the US stock going to those 2 nations is just being 3rd partied right into China under the radar of Chinese officials. Backtrack nation of origin is often difficult to verify on an international scale.

China wags the dog on everything bought or sold on a global market. They have the $$$ and we WILL sell them the grain they demand, if for no other reason than they have so much US long term debt bought up, and we have no choice but to provide them with what they bid on in order to keep them happy and keep them buying Treasuries.
All this results in higher costs to raise livestock here, higher prices in the grocery store and eventually (when China gets their livestock production up and running) another competitor on the international beef and dairy market.

 

[greybeard]

Did a quick look and came up with these:
http://beefmagazine.com/cowcalfweekly/0 ... feed-china

http://www.nytimes.com/2012/04/21/busin ... d=all&_r=0

Import bans prevent China-based farmers from buying live cattle from the United States. So they've snapped up more than 370,000 embryos and straws, the industry parlance for vials of beef and dairy cattle semen. That is down from 2010, but up 15 percent from two years earlier.

China, the world's most populous nation, isn't the only country doing this. Sales to Russia and Turkey, the biggest markets for U.S. livestock-breeding exports last year, have risen even faster.

But the impact of a vastly larger, more efficient, livestock sector in China would cause a major shift in the global market, particularly for grain demand.

China could need an incremental 20 million to 25 million metric tonnes of corn in the next few years just to keep up with the growth of the swine industry, according to a recent research report by Rabobank.

 

[Sir Loin]

Greybeard,

Nice research and I am in total agreement.

China will get cattle one way or another.
Then the question is, how will they feed them?
A. Force the US to sell it to them.

Now the question is:
What will be the effect on our cattle industry if China forces the US to sell them, say 5 - 10% of our annual corn crop?

IMO, feed prices will rise while cattle prices are going down and marginal cattle operations ( small and hobby farmers ) will go out of business, further bringing down the US inventory of cattle.

Hence, in 10 years, I would not be surprised if only the big boys are left in the cattle business and supplying 90% of our beef.

SL

 

[greybeard]

Greybeard,

Nice research and I am in total agreement.

China will get cattle one way or another.
Then the question is, how will they feed them?
A. Force the US to sell it to them.

Now the question is:
What will be the effect on our cattle industry if China forces the US to sell them, say 5 - 10% of our annual corn crop?

IMO, feed prices will rise while cattle prices are going down and marginal cattle operations ( small and hobby farmers ) will go out of business, further bringing down the US inventory of cattle.

Hence, in 10 years, I would not be surprised if only the big boys are left in the cattle business and supplying 90% of our beef.

SL

Hard to say about the little guys. It takes a heck of a lot to run cow guys out. Drought will do it, and we have sure seen our share of it in the last 5-10 years, but it still remains that the average "farm/ranch" in the US is less than or about100 acres and less than 100 hd beef cows according to USDA.
I don't think emerging markets will affect the small guys much other than increased feed prices--not that I am minimizing that. I would think it would take China @ least a couple of decades to get a big market share in beef exports, but they will be eating up any excess feed production available all that time, while demand for beef stays reasonably high both in the US and elsewhere in the modern world. One of the reasons for the slight decline we see in beef demand domestically is economics--our poor economy. Shoppers want beef, but can't justify paying $8-9 a lb for choice ribeye when $3/lb chicken is available. IF our economy really turns around, we could see a return to increased beef demand here in the US, but I just don't see the economy getting better any time soon.
Tho I see no way to prevent other nation's from buying more and more of our corn, it may be possible to tie those sales to us being able to export our beef into places like China, and producers could ride that wave till the eventuality of China becoming both completely self sufficient and being a big exporter of beef. After that--who knows?
I still believe demand in the US will remain strong with a slight increase, as well as an increase in consumer beef prices, live cattle, and slaughter cattle for the short term-3-5 years.
Once China and others take a big bite out of our available grain, production prices go up, consumer prices follow, then domestic demand slows because of higher retail prices dictated by higher production costs. Consumers have to buy gasoline no matter what it costs at the pump--they don't HAVE to buy beef.

One other darker aspect:
China has mimicked every move we have made--learned from us in every way except the thing that put us on top to begin with. WW2 put us on top for 40 years because all the rest of the world was either underdeveloped, undeveloped, or destroyed. We and Canada alone were untouched by the ravages of war and it was only after the rest of the world caught back up that we began our decline. If China holds true to the recent past, they may well take that last step as well, and try to follow the same path we did to be not the biggest dog on the porch, but the ONLY dog on the porch.

Anyway--good discussion..

 

[Stocker Steve]

The beef cattle market over the next 10 years

Over the next 10 years:
Where do you see beef cattle inventories going in the US, up, down or remain the same, and why ?
Where do you see demand for beef going, up, down or remain the same ?
Where do you see beef cattle prices going?

- Down. Easier to park the row crop tractor, or sign a hunting lease, than to overwinter cattle.
- Up, but tougher question is who will supply the water? Dairy seems to be a trend leader in some cases. Recent article said (empty otherwise on the return trip) ocean freightors will deliver alfalfa from Califorinia to China for $30 a ton...
- Up, but it doesn't matter. Question is how many $ are left after paying the bills.

 

[cowboy43]

With the uncertainty now going on with the economy and the epa I do not see how anyone can predict where we will be in 10 years. I get the feeling that a certain element would like to see all our food imported from other countries.

 

[SRBeef]

A couple ideas above concern me:

Limiting sales of corn - have we forgotten the fact we are advocates of freedom and free markets and the effects of the ill-conceived 1979 embargo? We need to let the market determine where the corn goes.

China going to war... - the Chinese are smart people. They understand it is not good business to fight with your best customer. They also understand there would be no winner in war.

The little guy - I see folks taking advantage of opportunities as the potential profit becomes very attractive.

What is fairly certain is that the little guy is not going to be giving away calves much longer as has been SOP in the cattle business for a long time. He is going to expect and demand a fair price for his product or he will find another market or use for his ground.

jmho.

Jim

 

[Sir Loin]

For certain the "economy" will be the influencing force as to what happens over the next ten year, but the economy is no longer based on a free enterprise system. It is based on government influence and control.
Therefore you can no longer look at what market forces will do, but instead you need to look at what the government will do to/with the economy.

Winston Churchill once said: "The further back you can look, the further forward you are likely to see. "
So in keeping with this philosophy, if you look back at what the government has done to the,
Steel industry, the garment industry, the petrochemical industry ( oil ) the automotive industry, the airline industry and thousands of both large and small businesses, you should be able to see where the food industry ( cattle) is heading over the next ten years.

With that said, I will stop there to avoid crossing board boundaries into politics.
May the good Lord bless us all.
SL

 

[SRBeef]

Sir I believe your reply tha everything is the "government's" fault is way off base. Greed by various parties involved played a major factor in several of your examples.

 

[Sir Loin]

SR,
Re:

Greed by various parties involved played a major factor in several of your examples.

Sorry but I don't see it. I guess it all depends on how you define "greed".
I define it as:
MW. ": a selfish and excessive desire for more of something (as money) than is needed"

As I read that it can only apply to individuals, not businesses and/or Corps as both "selfish" and "desire" are emotions that can only be held by people.

Plus in the capitalistic society world of business there is always more of something (as money) needed. Without it businesses could not expand and/or diversify and be put out of business simply by inflation or supply and demand.


How do you see greed playing a part in one of my examples?
SL

 

[SRBeef]

I am not going to get into a protracted historical arguement that has little to do with cattle and a lot to do with political views. Good day sir.

Jim

 

[Kingfisher]

I'm not sure why in the long term China would need to buy corn from us. Can't they grow corn? I understand they got a taste for pecans a few years ago and are in the process of developing huge pecan orchards. Why couldn't they grow their own cattle feed? Maybe we should teach em how to make hay.....

 

[greybeard]

They don't--in the long term--just in the interim. Till they complete their planned conversion from predominately rice production to additional wheat and grain production acreage. They have a very long term plan to be not only self sufficient, but to be in the driver's seat in exports as well--in every sector. Going to take some time, but as an ancient civilization, that don't bother them a bit. But no--they don't know how to grow corn, but no worries--were gonna teach em, just like we did with everything and everybody else since the end of ww2.